The matrix of political and economic systems |

The matrix of political and economic systems

Hal Sundin
Post Independent
Glenwood Springs, CO Colorado
As I See It

These two opposing forms of government and two opposing economic systems determine the quality of the lives of those who live under them. But first, some definitions:

Democracy: a government in which the supreme power is held by the people.

Totalitarianism: a government in which the people are subordinate to the state, which imposes strict control over all aspects of life.

Capitalism: an economic system in which ownership of land, the means of production and distribution, and the exchange of wealth is held by individuals and corporations.

Socialism: an economic system based on common ownership of these elements.

Nations can be based on any combination of these forms of government and economic systems.

Combining totalitarianism and socialism yields communism, as seen in Russia and China, both of which have diluted communism with the gradual intrusion of some degree of capitalism. The result, especially in China, has been a phenomenal rise in its economy.

In the 1920s, the original goal of the National Socialist (Nazi) Party in Germany, led by Adolf Hitler, was also totalitarian socialism. But when Hitler became chancellor in 1932, he abandoned socialism because he needed the German industrialists and financiers in his ambition to rearm Germany and conquer Europe. He transformed Germany into a totalitarian capitalist (fascist) state and, ironically, a bitter enemy of Russian communism.

Totalitarianism, in both of its economic forms, socialist and capitalist, has been losing favor in the decades following World War II, and been increasingly replaced by democracy.

Democracies can also be based on capitalism or socialism as their economic systems. Either combination comes with its own advantages and disadvantages.

In choosing between capitalism and socialism, a democratic society first must resolve the question, “What should be the role of government?” Answers that have been offered are: to serve the well-being of the country, and to do the greatest good for the greatest number.

Which is the better choice – capitalism or socialism? In their strictest form, the answer is “neither.”

The fatal flaw of pure socialism is that it fails to reward people in proportion to their contribution to the economy.

On the other hand, socialism can provide an important benefit to society by helping to meet people’s financial needs for such essentials as health care, educational opportunity and retirement.

In a democratic society, where the power is held by the people, it is all too easy for the government to give in to the public and give away more benefits than it can pay for. That excess in social programs is responsible for the economic crises now confronting the European Union, and for the financial distress in the Medicare program, made worse by the underfunded Medicare Part D drug coverage added by the Bush administration.

Democracies must be realistic enough to exercise and to encourage the public to accept the measures of self-discipline it takes to live within their means.

The strength of capitalism is that, unlike pure socialism, it does reward people in proportion to their contribution to the economy. It is the ambition for personal gain that is the lifeblood on which the capitalist system thrives.

Democratic governments must recognize their obligation to serve all of the people and not become subservient to the power of wealth by exercising reasonable control over that ambition.

Absolute capitalism can create problems matching, if not exceeding, those of pure socialism. Without appropriate legislation and proper enforcement of regulatory control, the ambition for personal gain can grow into unbridled greed. If the government fails to fulfill its proper role of controlling capitalism, the selfish desire for acquisition of wealth will sew the seeds for its destruction. And a government dominated by the wealthy is no longer a democracy. It becomes a plutocracy.

The ideal choice should be a blend of those features of both capitalism and socialism that best serve the economy and the needs of all of the people.

The best examples of this are in the Scandinavian capitalist-social democracies of Denmark, Norway and Sweden.

Let us hope that those in our government will have the wisdom to stop fighting blindly over ideologies. We need them to see that the road to our future as a nation depends on their working together to combine the best parts of both economic systems in order to remedy the financial strife and stress far too many Americans are now living with.

Neither capitalism nor socialism are evil in themselves. The evil lies in their extremes.

“As I See It” appears on the first and third Thursdays of the month. Hal Sundin lives in Glenwood Springs and is a retired environmental and structural engineer. Contact him at

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